Wells Fargo Still Selling Adjustables

Wells Fargo sold $24 billion of its lowest-yielding adjustable-rate mortgages in the third quarter, clearing out the balance sheet to make room for higher-paying assets.

Despite the large asset sale, Wells said that the average loan volume on its balance sheet increased 8% from one year earlier. But the sale of those ARMs had did take a bite out of loan growth. Wells said that excluding the $24 billion sale, its average loan balance would have increased by 20% from a year earlier. Related to the asset sale, Wells posted $33 million in losses, not including foregone interest income related to the sale of the ARMs.

"Excluding real estate one-to-four family first mortgages, consumer loans continued to grow at a healthy pace, up 26% year-over-year," said Howard Atkins, chief financial officer, in the company's quarterly earnings report.

During the last six quarters, Wells Fargo has sold $60 billion of its lowest yielding ARMs, Mr. Atkins said. The average yield on those assets was 4.22%. Wells said its average loan balance in the quarter was $295.6 billion. Its average commercial loan volume, which includes business loans and commercial real estate loans, was up 14%, the company said.